Boyer ex rel. Boyer v. Fulmer

Opinion bt

Mr. Justice Green,

The learned court below ruled this case upon the authority of Timlin v. Brown, 158 Pa. 606. If the obligation of the defendant were the same as the obligation of the lessees in that case the ruling would be correct. It must be conceded that there is a close similarity in the controlling terms of the contracts in the two cases. But a critical examination of the terms of the respective contracts has convinced us that they are radically different in the essential matter which gave rise to the decision in the Timlin v. Brown case. In that case the terms of the lease constituted a sale of the coal in place und.ei the whole of the tract, and the price to be paid was the price of the whole of the coal, to be paid in maximum and minimum sums which were absolutely fixed in any event. Our brother Dean, delivering the opinion said, “ The grant is absolute of all the coal on the tract; the maximum and minimum prices are fixed absolutely. It is not a mere license to mine. This stipulation in the contract, ‘ In case the said Brown and Hunter fails to get out the amount before stated, they agree to pay a royalty on 10,000 bushels in each and every year,’ fixes without regard to contingencies the liability to pay. . . . There is nothing in the contract indicating any intention to modify or relieve the defendants from their absolute obligation to pay on the contingencies of the mine proving unprofitable, or of the exhaustion of the coal before the end of the term.”

Our brother Dean refers to the cases cited for the opposing contention and points out the differences between them and the Timlin case, and proceeds thus: “ In all these cases the existence of the subject of the contract was unknown or uncertain, or if it existed the quality could only be determined by actual use. In the case before us at the date of the contract the quantity was as well known as it could be at that time. . . . But the existence of workable marketable coal under this land had been demonstrated by the lessees in sinking the shaft. The only element of uncertainty — the quantity — they took the risk of by an unqualified covenant to pay a fixed sum.”

In the case at bar these elements are absent. The premises leased were a tract of timber land and a piece of arable land. The land was leased for the purpose of digging for and mining ore which was supposed to be there but it had not been developed. The lessee was to have a right to dig for, mine and take away iron ore for a period of fifteen years, and was to pay sixty cents a ton for every ton of ore sold from the premises during tiie term, “ to be paid monthly, but the amount to be paid to said first party shall in no year be less than $400 to be paid within the year respectively.” In case of a' temporary suspension of work or if the lessee did not mine enough ore in any one year to yield $400, he was to pay the $400 but to have the privilege of taking out ore in another year to make up the amount.

These were the terms of the lease as it was made between the original parties. There was no agreement of any kind to pay a fixed absolute minimum sum for the ore on the place. That which was to be paid for was ore actually mined, and of course if the ore gave out before the termination of the lease, under the decisions which will be presently referred to, the obligation to pay royalty ceased. The lease was subsequently assigned to Fulmer by the lessee, or those who held his right, and a written agreement was made between the plaintiffs who held the lease and. the defendant. Tins agreement contains, first, an assignment of the lease, to hold from April 1,1878, for twelve years, then an agreement by Fulmer to pay to the original lessors, the Steeley sisters, the royalty of 60 cents a ton stipulated to be paid in the lease, and also to fulfill all the covenants of Boyer, the original lessee. Next Fulmer agrees to pay to Catherine Boyer an additional sum of 17& cents per ton on all ore mined and taken away from the premises, to be paid monthly, between the last day of each month and the fifteenth day of the following month with provisions for the weighing of the ore as taken away. Then comes a stipulation in the following words, “ And the said Henry Fulmer shall mine and take away and pay for as aforesaid not less than one thousand tons of iron ore in each and every year. He shall pay to said Catherine Boyer her royalty of seventeen and one half cents per ton on one thousand tons per annum whether he mines that or not.” This is the ordinary provision contained in mining leases, where a certain minimum amount is agreed to be taken out each year, and if it is not taken out the lessee agrees to pay the royalty notwithstanding. All such stipulations however proceed upon the theory that the ore or coal is in place, and can be taken out if proper efforts are made. They do not alter the fundamental character of the contract, or change its provisions as they otherwise exist. They are intended as incentives for compliance with the duty of adequate performance, and of prompt payment.

Thus in the case of Muhlenberg v. Henning, 116 Pa. 138, the lessees covenanted, “ to raise, mine, carry away and sell at least 1500 tons of iron ore annually during the continuance of this lease ; or in default thereof, to pay a royalty of 1525 annually.” Yet in an action to recover two years’ royalty of ¡¡>525 we held, that where the affidavit of defense alleged that, though the mines were worked in a workmanlike and skillful manner for about nine months, on account of the nonexistence of sufficient ore and its inferior and unmerchantable character, the lessees were unable to carry on and continue the operations of digging, mining and washing ore as was contemplated by the parties to the agreement, and could not perform the covenants of the lease, it was a good defense to the action. Mr. Justice Clare:, delivering the opinion, said, “ If, however, it was established by actual and exhaustive search that, at the time of the contract, there was in fact no ore in the land, or no ore of the kind contracted for, it cannot be pretended, upon any fair or reasonable construction of the contract, that the lessees were nevertheless bound for the royalty of $525 annually; for the payment of the royalty was undoubtedly based upon the assumption of the parties that ore, ore of the quality specified, existed there. ... We are not to construe the contract to require the lessees to perform an impossible thing. The $525 is not a penalty, it is the price of the ore. The grant was of the ore in place, and, if the subject-matter of the contract fail, the price is not payable. If there was no ore to mine, there could be no royalty to pay.; ... We think the manifest meaning or intention of the parties, as exhibited by the terms of the contract, was fifteen hundred tons of ‘ clean and merchantable iron ore’ were to be mined in each year, if that quality and quantity of ore were there found, and that the contract by necessary implication must be so construed.”

And so in the present case it is perfectly manifest that the parties contracted entirely with reference to iron ore which was supposed to exist, and did exist, on the land demised. The lessee was hound to use all proper efforts and exertions to find ore, and if found to mine and take it away, and to take out at least enough in each year to yield $400 annually, and if he did not take out that much he was bound to pay the $400 annually in any event, but of course this obligation proceeded upon the assumption that the ore was there, and continued to be there, in sufficient quantity to enable the lessee to perform his contract in this respect. If the ore was not there at all, or became exhausted, so that it could be no longer taken out in such quantity, the lessee was not bound to pay for it. He could not do an impossible thing and therefore could not be held liable for not doing it. There is nothing in this lease or in the contract between the plaintiffs and defendant which required him to do what he could not possibly do or else to pay for not doing it. Neither the lease nor the contract is a sale of the ore in place for a definite fixed minimum sum as was the case in Timlin v. Brown. Neither of these papers required that anything should be paid for but ore which could be taken out. The money to be paid was the price of ore which, was, or could be, mined. If that failed there was no liability to pay anything.

The same doctrine was applied in the case of Kemble Coal & Iron Co. v. Scott, 15 W. N. C. 220. In that case Scott granted to the company “ the exclusive right to dig and take away the iron ore in a certain tract of land, the company covenanting to pay at the rate of fifty cents per ton of ore mined,” and further that for any period of three years, after the first year the rent in the aggregate should not be less than $10,000 whether ore to that extent was mined or not. The plaintiffs sought to recover for a period of three years the minimum rent, $10,000, under this covenant; on the trial the defendant offered to prove that the premises did not contain the necessary quantity of ore fit for use in a furnace to yield the amount of royalty to be paid, and we held this to be a good defense notwithstanding the absolute covenant for the payment of the amount named. Mr. Justice Gordon said in the opinion, “ Hence the material question was, could the ore found in the leased premises, under the present methods of making iron, be properly used for the purpose indicated? If it could be so used, and there was enough of it, the plaintiff had a right to require the full performance of the contract; if however there proved to be a failure in either of these particulars, then was the defendant released from payment either in whole or in part, as the case might happen.” The same doctrine was affirmed in the case of McCahan v. Wharton, 121 Pa. 424.

In Timlin v. Brown there was an absolute engagement to pay a royalty on 10,000 bushels each year. That was the minimum purchase price of the coal whether there was any coal there or not. But in the present case'Fulmer simply agreed to mine a thousand tons of ore each year and to pay 17 J cents per ton whether he mined it or not. That is, if he fails to mine the quantity of ore he agreed to take out, he pays for it just as if he had mined it. But he is only to pay for ore which he might have taken out if he would. If the ore is not there he is under no duty to pay because he never could get it. The foundation of his liability to pay is the fact that the ore is there. If the ore is not there the fundamental condition of all liability is gone.' The assignments of error are all sustained.

Judgment reversed and new venire awarded.

Mitchell, J., dissents.